Bruce Power misses deadline but still gets $35.8 million from electricity users

Waterloo Region Record

TIVERTON — Ontario electricity ratepayers paid a premium of $35.8 million to Bruce Power over a three-month period because of the company’s claim that it’s not to blame for missing a deadline to re-start two reactors.

The higher price paid by consumers between July 1 and Sept. 30, came because of a clause in Bruce Power’s contract with the Ontario Power Authority.

The contract imposed a penalty if Bruce Power missed a July 1 deadline for re-starting two units at the Bruce A nuclear station that had been idle since the late 1990s.

If Bruce Power missed the deadline, the company would get reduced revenue from two other units at the Bruce A plant that has been operating for several years.

Under Bruce Power’s contract with the OPA, the operating units receive 6.8 cents a kilowatt hour for the electricity they produce.

But if the other two units missed their July 1 deadline, Bruce Power was to receive the wholesale market price for the output of the operating units.

The market price for the three months from July to September averaged just 2.99 cents a kilowatt hour, according to the Independent Electricity System Operator.

And in fact, Bruce Power only returned the two units to service in October, missing the deadline by more than three months.

But Bruce Power argued that the failure to re-start the units on time wasn’t their fault.

The company said it installed a replacement part in the generator of one of the units as part of the refurbishment.

The part — which had sat in storage for years — was defective, and caused significant damage when the generator was re-started.

That led to extensive repairs delaying the generator’s startup. And crews working on the second generator had to be diverted to help repair the damage, so its start was also delayed by more than three months.

A technical report said that the replacement part that caused the trouble was, in fact, defective.

Further, it said Bruce Power could not have known about the defect, and would not have been expected to discover it under normal industry practices.

As a result, Bruce Power’s claim not to be at fault has so far been allowed.

The financial impact became clear when TransCanada Corp. reported its latest quarterly earning. TransCanada is a major shareholder in the Bruce A operation.

TransCanada reported that the two operating Bruce A reactors had produced 943,000 megawatt hours of power in the third quarter.

Under the contract, the company received $64.1 million for the output.

Had Bruce Power been paid the market price, it would have received $35.8 million less, or $28.3 million.

But while the money has been paid, the issue isn’t permanently settled.

The power authority says it is still conducting due diligence on the incident that triggered the delay.

“The process will take at least a few months to complete,” according to a message from the OPA.

TransCanada has continued to book the contract revenue in its financial statements.

Bruce Power said it’s not appropriate to comment until the OPA completes its investigation.